Sunbeam 2003 Annual Report Download - page 24

million interest rate swap (“Second Replacement Swap”). Like the swap that it replaced, the Second
Replacement Swap is a swap against our Notes. The Second Replacement Swap has a maturity date that
is the same as the Notes. Interest is payable semi-annually in arrears on May 1 and November 1. We have
accrued interest on the swap at an effective rate of 6.38%.
In return for unwinding the swap, we received $3.2 million of cash proceeds. Of this amount,
approximately $1 million of such proceeds related to accrued interest that was owed to us at such time.
The remaining $2.2 million of proceeds is being amortized over the remaining life of the Notes as a
credit to interest expense and the unamortized balances are included in our Consolidated Balance Sheet
as an increase to the value of the long-term debt. We are exposed to credit loss in the event of non-
performance by the other party to the Second Replacement Swap, a large financial institution, however,
we do not anticipate non-performance by the other party. The fair market value of our interest rate
swaps as of December 31, 2003 was against us in an amount of approximately $2.6 million and is
included as a non-current liability in our Consolidated Balance Sheet, with a corresponding offset to
long-term debt.
During 2003, we repaid seller debt financing, incurred in connection with the Tilia Acquisition, in
the principal amount of $10 million. The remaining seller debt financing consists of a non-interest
bearing note in the principal amount of $5 million, bearing interest at 5%, which is due on April 24,
2004.
In January 2003, we filed a shelf registration statement, which was declared effective by the
Securities and Exchange Commission on January 31, 2003. This shelf registration statement was
intended to facilitate our access to growth capital for future acquisitions and allowed us to sell over time
up to $150 million of common stock, preferred stock, warrants, debt securities, or any combination of
these securities in one or more separate offerings in amounts, at prices and on terms to be determined
at the time of the sale. The equity offering completed in September 2003 and the $30 million of Notes
issued in May 2003, were covered by our shelf registration statement and, in the aggregate, constituted
the issuance of approximately $150 million in registered securities. Accordingly, no further issuances will
be made under this registration statement.
During 2003, we incurred costs in connection with the issuance of the Notes and the Amended
Credit Agreement of approximately $5.9 million.
2002 and 2001 Activity
In April 2002, in connection with the Tilia Acquisition we made an offering of $150 million of Notes
to qualified institutional buyers in a private placement pursuant to Rule 144A under the Securities Act of
1933. The Notes were issued at a discount such that we received approximately $147.7 million in net
proceeds. The Notes are scheduled to mature on May 1, 2012, however, on or after May 1, 2007, we can
redeem all or part of the Notes at any time at a redemption price ranging from 100% to 104.875% of the
principal amount, plus accrued and unpaid interest and liquidated damages, if any. Prior to May 1, 2005,
we may redeem up to 35% of the aggregate principal amount of the Notes with the net cash proceeds
from certain public equity offerings at a redemption price of 109.75% of the principal amount, plus
accrued and unpaid interest and liquidated damages, if any. Interest on the Notes accrues at the rate of
9.75% per annum and was payable semi-annually in arrears on May 1 and November 1, with the first
payment having occurred on November 1, 2002. The April 2002 Indenture governing the Notes also
contains certain restrictions on the conduct of our business.
Prior to the new Amended Credit Agreement, we entered into a credit agreement in connection
with the Tilia Acquisition (“Old Credit Agreement”). The Old Credit Agreement was scheduled to
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Jarden Corporation
Management’s Discusson and Analysis (continued)